According to the article one third of the oil was pumped in the Middle East. So what were they doing with that money, a lot of it went into world debt markets pushing down real interest rates, fuelling a global lending boom, led by debt laden Western governments and more specifically American consumers, though in his opinion the Brits lagged not far behind. This meant that in effect the oil producers were lending a lot of the money they were making back to their customers.
It also seemed with global bond yields so low the other oil producing countries of the Middle East were doing the same thing as Dubai with their money, investing more in their own economies and building for the future. If the emirate was anything to go by then the Middle East was a vast construction site. Dubai, which had practically run out of oil, was obviously attracting a lot of petro dollars and shrewdly transforming itself into an investment hub, a vast emporium and tourist destination, not unlike Singapore or Hong Kong, with a view to developing itself into a regional business centre, investing billions of dollars in offices, hotels and infrastructure.
Middle Eastern financial markets had developed at an astonishing rate and expanded into Europe and the USA targeting Western business acquisitions. Like all investors they had begun to worry about their investments and especially with a falling dollar, turning their attention to Europe, to which they were closer and had longer traditional links, fearing Europe less than the USA embroiled in its Iraq debacle and faced with looming trouble from its own debt laden economy.
Thinking how all very abstract it was and how little it affected his own immediate future, a modest man by Dubai standards, perhaps rich by Indian standards, he slowly dozed off and a passing hostess pulled up his blanket and gently eased back the broad comfortable business class seat.
*****
Chapter 8
Emirates flight EM555 landed in Kerala at Thiruvananthapuram International Airport at exactly three thirty that morning. The small airport was almost deserted and formalities were completed in a few minutes. Barton collected his bags and found himself outside of the customs area looking at a small colourful crowd of early risers anxiously awaiting the arrival of family and friends returning home after working as long as two uninterrupted years in the Gulf.
Looking around he spotted a bank and after a glance at the rates changed a couple of hundred pounds into Indian rupees and was soon seated in an Ambassador taxi, an Indian model originally based on the 1948 Morris Oxford.
It was a sedate twenty minute ride to the Maharaja Palace in nearby Kovalam. After checking-in the night manager led him to what he described as a Club Wing suite, announcing that it overlooked the Arabian Sea, not that Barton could see very much at four thirty in the morning, though he could hear the waves on the shore below. The suite was comfortable enough with a large balcony, though very different from the Dubai Hyatt.
Once the inspection was over and he was handed the room key Barton dropped onto the bed fully clothed and slept until he was awoken by the room boy knocking at his door, he looked at his watch and saw that it was eleven local time, remembering he had moved his watch forward one and a half hours from Dubai time.
After telling the boy to come back later he stepped out onto the balcony into the brilliant sunshine. The hotel was built on a palm covered headland, about twenty or so metres above the sea that crashed onto a mass of huge red coloured sandstone rocks worn smooth by the waves. To his left a broad bay swung around to another high point about two kilometres distance, on which stood a red and white lighthouse, the further part of the bay was lined with low building. To the right the coast stretch far into the distance, the long sandy beach lined by coconut palms, and not too far off was what he assumed to be a small mosque, it was pastel pink with picturesque onion shaped domes to its minarets.
On both beaches he saw knots of people punctuated by the colourful saris of Indian women. There was a slight breeze that moved the palm fronds, the air was warm and clean. He stretched and thought about eating, but first a shower and a quick exploration of the hotel.
The lobby area was long and spacious, the cool marble floor shone brightly reflecting the unobtrusive ceiling lights, it was of a clean uncluttered design with two parallel rows of tall pillars supporting a high peaked roof built of heavy wooden beams. He found the restaurant and selected a table overlooking the north beach. A waiter presented a menu and Barton asked whether or not it was too late for breakfast.
'The buffet is finished Sir, but you can order ? la carte,' the waiter replied tilting his head.
Barton ordered toast and scrambled eggs with freshly pressed orange juice, then leant back to admire the surroundings. As it was a little too early for lunch only one other table was occupied - by a young couple too engrossed in each other to be concerned by Barton's arrival.
His guide book entitled South India, bought at Dubai Airpor, lay on the table beside him still unopened. Barton had absolutely no idea what to expect of the country; his knowledge of India to that precise moment in time was strictly limited to Indian restaurants and cricket, plus the little one or two of his Indian clients had told him in passing. As for the rest he vaguely remembered snippets of the stories his father had told him of his travels and the objects that had decorated his parents' home, a bronze Nepalese Buddha and a couple of tankas, one of which tastefully decorated the visitors' bathroom. As to history it was not his strongest subject, Ghandi was reduced to some kind of inspired fakir who had led India to independence and Indira must have been his daughter. As to Imran Khan he could not remember whether he had played for India or Pakistan.
*****
Chapter 9
John Francis and his wife Claire had travelled on the same flight from Dubai as Barton, though in economy, they also made a stopover in Dubai, for the day only. Arriving from Paris at seven in the morning, they had had time to explore the Old Town, followed by a quick shopping tour at Bur Juman mall before taking the evening Emirates flight to Trivandrum.
They were experienced travellers, it was not their first visit to India and they planned to stay at least two months renting a villa near the beach area in Kovalam. However, their Internet search had been infructuous, the prices seemed high and they were advised by friends a better deal could be struck on the spot where they could see the property first hand.
Trying to make a hotel reservation had been just as inconclusive and they had finally decided to take pot luck on arrival. At Trivandrum they had also taken an Ambassador taxi to Kovalam, where they awoke the touts and small hotel keepers used to night arrivals. After a somewhat bleary inspection of a couple of guesthouses they opted for a room at the Mini House at the south end of Kovalam Beach area just south of the lighthouse.
They followed the guesthouse owner as an almost naked porter agilely carried their two heavy suitcases balanced on his head, first down a steep flight of stairs then up another to the first floor and their room.
The room had a balcony and the sound of breaking waves told them the sea was just below. There was no air-conditioning, the temperature was however comfortable and they soon settled down to sleep to recover from their long journey from Paris via Dubai.
Late the next morning they awoke and the view from their balcony confirmed what they had suspected, to their delight the sea was directly below them, a tiny inaccessible rocky cove surrounded by tall coconut palms, in the near distance a narrow fishing skiff rounded a point rowed by four very dark skinned men. It was more than they could have expected, the sky was blue and the weather comfortably warm.
They set out to find breakfast, walking down a steep hill towards the beach, surprised to be greeted by shop keepers, tuk-tuk drivers and artisans. Rounding a couple of makeshift gift shops planted on the beach itself they got their first view of Kovalam. A colourful array of restaurants, shops and small hotels, aligned higgledy-piggledy, faced the small bay, overhung by a backdrop of tall coconut palms.
The off white sand of the beach was streaked with black, a stack of sa
nd filled plastic hessian sacks formed a series of steps leading up to the narrow seafront promenade. As they took in the colourful scenery they were hailed by restaurant owners inviting them to take a drink and look at their menus, it was almost lunch time.
The shops overflowed with textiles, clothes, cheap jewellery and handicrafts. Tourists like themselves inspected the restaurants, checked the menus, or simply admired at the goods displayed outside the shops. Many were just as pale as themselves, no doubt new arrivals, it was the start of the Christmas rush, the high season and high prices.
The new arrivals contrasted with those already settled in, the latter easily recognisable by their tans, varying from an angry red to a deep bronze, depending to some degree on where they came from, the Brits tended to be the former. The men wore Indian shirts, the girls Indian batiks or plain wraparound skirts, both sporting local handicraft necklaces. A good many of the tourists seemed to be Scandinavian or Brits, but there were also a scattering of middleclass Indians.
The beach appeared to end at a small rocky promontory, but arriving at the end of the promenade they turned a corner and saw another beach, it was in fact a continuation of the same bay, it was longer, a couple of hotels, a few shops and restaurants, then another long stretch of palm lined sand that finished about a kilometre away at another promontory.
They turned back, finally deciding on a not very Indian establishment for their first meal in Kovalam, the German Bakery, situated on the first floor of a yellow and ochre building. They took a table with a view out to the sea and each ordered juice, coffee and a sandwich.
They decided to remain at the Mini House two or three days so as to get their bearings whilst looking more permanent accommodation where John could settle in to start writing and research. The Mini House was comfortable enough, quiet, apart from the noise of the waves, an extraordinary unoverlooked view and an almost invisible owner. In addition there was a short but finite distance between guesthouse and the noise and tattiness of the beach front area, regretfully in a poor state of maintenance, strewn with rubble and garbage in more than one or two places.
What they needed was a villa near the beach with telephone and Internet connections, Francis had a satellite link for his laptop, though it was costly for everyday net usage. He was a writer and a journalist, his current novel was centred around the unwinding of the housing bubble in the UK. His novels often treated the ills of modern society on subjects that ranged from finance to the ravages of industry on Indonesian rainforests, and from the long term transformations caused by immigration to religion and the origins of man.
In working on his new novel he had carried out extensive research and outlined the main protagonists, but how they were linked together were not yet clear. He was in search of ideas and hoped Kovalam would provide him the raw material.
The story of bubbles had always been a good theme to describe human cupidity and duplicity, stories of the avaricious were recurring themes developed in his previous novels. His laptop contained over seven hundred pages of drafts and notes that had to be paired down, rewritten and honed into a final version. The culmination of a good story always required a dramatic event with the fall of an unlikeable villain and a twist of fate to save his likeable counterpart, a happy ending. Yes - a happy ending whatever its form was the essential part of a good novel.
The financial crisis which had caused the bubble to burst was still unravelling and the daily news was filled with reports of the subprime crisis, the drama of lost homes, the Northern Rock soap opera and small investors' lost money. There was also the annual payout of huge City bonuses, in spite of the vast losses reported by leading investment banks, bonuses built on the backs of countless millions of wage earners and small savers.
The bonus system had only encouraged 'the anything goes' approach to making money, with marketing specialists and mathematicians inventing complex instruments, massively launching never before tested products onto the market to feed the voracious appetites of banks and financial institutions. The tragedy was in the long run it was the shareholders, borrowers, small investors and of course the tax payers who paid the highest price as the banks licked their wounds looking around to place bets on the next game using their customers money.
Up to that point in time no specific individual had emerged to play the role of villain. Past crises had produced Nick Leason of the Barings, Messier of Vivendi, Enron's Ken Lay and Jeff Skilling and of course others. Every day Francis scanned the news on the net to see whether a central villain had emerged, but for the moment he was disappointed, the villains were vaguely collective.
*****
Chapter 10
Barton remembered the Thatcher period and the recession of the early nineties, however many people had forgotten that and younger people, that is those under thirty five, had never experienced a recession. Records showed that consumer spending and GDP grew at similar rates, which was very normal since consumer spending accounted for more than 60% of GDP. In the crisis of the early 1990s, when Britain withdrew from the European Exchange Rate Mechanism, consumer spending fell more than the GDP and as a consequence it was the consumers themselves who felt the lash back.
During the boom that led up to the nineties crisis, debt levels soared and house prices rocketed, leaving consumers highly vulnerable to a sudden and vertiginous rise in borrower interest rates. When the crisis hit, house prices fell, both in real terms and in nominal terms for the first time in decades, the effect was not only severely felt by consumers, but also by the services sector and especially in the South East, all of which resulted in the most serious British recession in recent memory.
Barton had long worked in the City of London, his much varied career had covered banking, insurance and trading. His ideas had not been suited to corporate thinking and early on he realised he would have more freedom and be able to earn a better living as an independent financial advisor and broker.
Those working in the environment of financial services in the City of London could not avoid being relatively well informed on the workings and events in international finance sector with the ambient flood of information and background chatter, however, it had little specific interest for Barton. He preferred his own more down to earth world with his familiar circle of contacts and business associates.
He prided himself in understanding what a client from Epping or Upminster needed, which did not prevent him from building a small circle of foreign expatriate friends, many of whom seemed to be chasing what seemed to him illusory deals in the Middle East or some other exotic region of the world.
His experience warned him that the similarities with previous crises were great and worse the build up of debt and the housing bubble threatened a greater disaster than ever before. I should know he wryly thought to himself, and with reason considering he had contributed more than his share to the coming crisis, arranging mortgages for clients and guiding them through their fraudulent income declarations, people whose financial situation would collapse at the first life crisis: divorce, unemployment or illness.
Did he feel guilty? Not really, it was the duty of each and every punter to read the small print and the responsibility of their lenders to respect the traditional caution of their calling.
The problem was not only City bonuses and the drive for profits motivated by greed and blindness, it came from every level of British society, people believing the salesman's pitch, and the greatest salesman of the century had run Britain for ten years; Tony Blair, and his henchman Gordon Brown who believed he had invented a new economy. He was not the only one, on the other side of the Atlantic bankers and wheeler dealers were leading the way with what looked like another New Deal, promising every honest working man the means to buy his own home, a dream that was to lead to disaster.
The gilt edge was wearing thin, for years the global elite had flocked to cosmopolitan London, where more than one quarter of the world's highest-paid traders worked with more than five hundred invest
ment funds operated from the City. London had become the most international city of the world. When the giant Citigroup announced a cut of 45,000 from its worldwide payroll it confirmed to Barton what he had suspected, the game was up, then when the market value of the same bank fell a staggering one hundred billion he knew it was time to get out.
A golden age fuelled by low interest rates, easy money and bonuses was coming to an end as rising prices, rising taxes, falling profits and diminishing expectations began to eat at the foundations of the world's greatest financial centre, and London, the billionaire's playground of the Western World, was becoming d?j? vue, it was time to move on before the stampede to cash in started.
*****
Chapter 11
It was Boxing Day when the Parklys boarded their direct flight, first class, to Kochi, once known as Cochin, on the south coast of India. Emma had described it as exotic, different from the antisepticised luxury of Gstaad or St Barts, where the rich headed at that time of year. Her girlfriend, Simi, whose wealthy family owned an industrial conglomerate in India, exporting fine textiles to leading fashion houses and interior decorators, had persuaded her to visit her in Kerala for the holidays.
Simi had booked them a suite at the Bolgatty Palace, which could be described as old fashioned luxury, situated in the lush tropical greenery of Bolgatty Island, a short boat ride from Kochi. It was one of the oldest existing Dutch palaces outside Holland, transformed into a hotel, away from the crowds, noise and smells of Kochi.
After a couple of days rest and adjusting to the time difference, they left with Simi and her friends on a traditional rice boat, transformed into a floating palace, slowly cruising south on the Backwaters to celebrate the New Year on Lake Vembanad, before finally disembarking New Year's Day in Kumarakom.
Wishing Simi goodbye, they continued their journey south to Kovalam in an SUV put at their disposal for the journey, a hectic ride of two hours, the driver clearly wanting to get home as quickly as possible for the holiday. To end their short vacation they planned a few days relaxation in the sun at the Maharaja Palace, before returning home to face the rigours of British winter.
Death of a Financier Page 4
